Playboy to outsource business functions

AP News
Posted: Nov 24, 2009 2:45 PM

Mens' magazine publisher Playboy Enterprises Inc. said Tuesday that it's going to outsource all business functions except editorial to American Media Inc.

American Media will handle production, circulation, advertising sales, marketing and other services of Playboy magazine and other publications.

Playboy will pay American Media a fee for its services and provide incentives to increase advertising and circulation revenue.

Playboy CEO Scott Flanders said outsourcing operations will significantly cut costs and lead to profitability at its magazines business in 2011.

Playboy said it's expected to lose about $8 million this year. But the deal with American Media should reduce the loss to $5 million in 2010 before turning a profit a year later.

Playboy said it expects to record a fourth-quarter restructuring charge of $2 million to cut 25 positions, some of which will be transferred to American Media.

Playboy has set March 2010 as the latest date for moving business functions over to American Media.

American Media publishes Star, National Enquirer, Shape, Men's Fitness and other magazines.

Shares of Playboy, based in Chicago, were down 10 cents to $4.02 in afternoon trading.

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